"Don't hate the playa, hate the game"
By Adam Lass, Market Report
Yes, I know: there is nothing sadder than a middle-aged man trying to adopt “hip” lingo. But it happens to be appropriate, at least just this once. So let me see if I can find an “old fogey” way to tell this tale.
Once upon a time, back in the dark old days before the Sarbanes Oxley Act made companies fill out an awful lot of paperwork, a bunch of Western energy companies went stark-raving mad. Got involved in all sorts of weird trades. Lied a lot about their assets and debts. Tried to bankrupt the very large state to their left.
You’ve probably heard of one of them. Little outfit out of Houston called Enron? In the end, vengeance was called down upon them, and what assets it had that were real were scattered on the far winds. Oh except for that huge mansion Ken Lay owned, you know, the one with its own zip code? Because he died before they could convict him, his wife got to keep the joint.
Anyone who was reading more than just the headlines knows that Enron was not alone in its slightly dotty bookkeeping habits. Rightly or wrongly, aspersions were cast upon fellow oil-patch “playas” like Dynegy (DYN:NYSE) and El Paso (EP:NYSE). Those who survived the ensuing prosecutorial pogroms promised to keep their noses very, very clean moving forward, and have mostly done so.
With that pledge in mind, I recently held my nose and allowed El Paso into the WOW portfolio. And so it was that I found myself reading in absolute cringing trepidation the headline off Wednesday’s AP feed that EP has received a “Wells” notice from the Feds warning that its reserve claims were being investigated.
A quick glance at the ticker, and sure as heck, share price was dropping faster than a rapper with half a bottle of Dom -- and three .45 slugs in him. That’s the bad news.
The good news is in the details. It appears that this notice is a leftover from the bad ole days of 2003 when EP was in “da game” as it were and perhaps overstating its reserves a bit. The folks at EP are cooperating fully, shipping forklift loads of paper to the bureaucrats in D.C., and I’m pretty sure that no one is talking arrest warrants or the like here.
And EP’s share price? By Thursday, it was back up to a fresh 52-week high today, and pushing WOW readers’ calls back to their max gain of 127.59%.
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